This house price thing......

[Workingman]

How long can prices keep going up the way they are?

Today it is claimed the new rate is 10.9% higher than last year.

My son is renting a two bedroomed semi over three floors for £1200 pcm. To buy it would be £233,000. The build footprint is just over 40 sq/m and the garden is about 18 sq/m. There is a one car driveway but no garage. It's a shoebox.

The three bed semi we bought in 1988 for £32,000 had an 88 sq/m footprint. The front garden was way bigger than M's 'garden' and it had a back garden big enough for us to play cricket on. It had a garage and driveway big enough for three cars - four at a push. It was on the market last year for just under £400,000.

This can't be sustainable.... can it?

[Suff]

It is hard to estimate just how much money the great council house sell off pushed into the market. Followed by the Blair Brown years of borrow till you bust.

I suppose there is still money and liquidity sloshing around the country for that one and until it washes out of the market it will continue to climb.

The other thing is average incomes and DINK's. That drives purchasing power up fairly significantly. So long as average wages continue to rise, the house prices will rise with them. Average wage rise in the last 7 years has been over 2%, except for the lockdown and now is riding at over 4%. Plenty enough to drive up the value of properties for a while.

[Workingman]

If wages rise by 2-4% and houses rise at ~10% it does not take long to push them out of reach of the average buyer even on 4-4.5 times income multipliers with an almost unreachable 25% deposit. If interest rates rise, and it could happen, then a lot of these people will be in deep trouble.

[cromwell]

My son is renting a two bedroomed semi over three floors for £1200 pcm. To buy it would be £233,000. The build footprint is just over 40 sq/m and the garden is about 18 sq/m. There is a one car driveway but no garage. It's a shoebox.

The three bed semi we bought in 1988 for £32,000 had an 88 sq/m footprint. The front garden was way bigger than M's 'garden' and it had a back garden big enough for us to play cricket on. It had a garage and driveway big enough for three cars - four at a push. It was on the market last year for just under £400,000.

This can't be sustainable.... can it?

Who knows? Forty year mortgages, lifetime mortgages, they keep making it easier to borrow.

One thing that would kill the market stone dead is inflation. If borrowing money suddenly comes with a 10% interest rate the repossessions would go through the roof.

That does sound like a shoebox WM. We know someone who bought one of these three-floor semis but sold it again after a couple of months; they didn't like it.

Before my son got his two up, two down terrace he was sharing something the size of a rabbit hutch for a combined rent of £650 pcm.

The cost of your son's semi doesn't surprise me but the rent is staggering. £1,200?
How can you ever save up for the deposit on a house when you are paying that amount in rent?

[Suff]

Actually how can you save up for a deposit when you are paying someone else's mortgage???

The thing is WM, house prices don't go up 10% all the time. They go up in fits and starts with falls from time to time in-between.

2% average wage rise can outrun house prices when the bubble bursts. The only wages I know that have gone negative in the last 30 years are mine. Contractors. I'm under what I was paid in 2000 and with IR35 it would be half that again due to IR 35 job wage destruction.

Unless house prices go up 10% year on year, it levels out at some point. But when houses have not been shifting for a while and prices are depressed, 10 rises are not uncommon.

[Kaz]

My first house in '79 cost £19, 950. Now it would probably be around the 300k mark. It's ludicrous! My son pays £800pcm for the smallest one-bed flat imaginable, with no hope of buying as you can't buy a flat where he lives for under 300k He's 43, in a good job, but living like a student

[Workingman]

It is temporary Cromwell. My son is a research Dr so not short of a bob or two. When DiL, also a Dr, goes back to work after maternity they are off to their own place. They are the fortunate ones, the average John and Jane are nowhere near.

Suff, a rise of 4% for a couple on the median of £62,000 between them is £2,480, a rise on an average house at 10%, even in fits and starts, is £28,000. It soon becomes unachievable. Throw in rate rises and it is a disaster for the ordinary ones.

Kaz, I have nieces and nephews in the same position.

[cromwell]

My first house in '79 cost £19, 950. Now it would probably be around the 300k mark. It's ludicrous! My son pays £800pcm for the smallest one-bed flat imaginable, with no hope of buying as you can't buy a flat where he lives for under 300k He's 43, in a good job, but living like a student

Similar Kaz. Our first house was £17,750 in 1983. Now it would be about £170-180,000. I was earning about £6,000 in 1983. Wasn't there a rule about three times the wage of the main earner plus the partners income as a maximum to borrow? But that rule got removed I think. Now you can borrow 90%of the mortgage and it used to be 100%. If we hadn't lent our son the deposit for a house he'd be stuck as well.

Around here houses are selling the same week they go up for sale.

[Suff]

Here is the difference in Scotland.

We bought our first ex council house in 1989 for $22,000. It is now valued on zoopla at $115,00 but larger houses on the estate with a better situation are selling for £95,000. I find zoopla valuations hopelessly optimistic.

We bought our second house in 2002 for £110,000 and sold it in 2010 for £175,000. Larger houses on the estate are currently selling around £260,000 but that house won't fetch much more than £200,000.

It all depends where you live. In Lincolnshire my daughter bought her house in 2013 for £144,000 but it's value, today in reality, is under £200,000.

As you can see, if you know where in the country prices are depressed, houses are not astronomical.

https://www.rightmove.co.uk/house-price ... y=scotland

This is well within reach of commute to Edinburgh. Not sure of the reputation of the area though....

[cromwell]

I was surprised looking at house prices in Hartlepool. Very low.